Buyers: Tips for Negotiating your Home Purchase

7 Negotiating Tips for Homebuyers

Remember these tips during the deal-making process of your home purchase.  

By: Tara-Nicholle Nelson  HGTV

                        

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#1: BE QUICK ON THE UPTAKE

It is critical to respond to counteroffers as soon as possible and to avoid making a counteroffer with any term that is not truly a deal breaker. Delays in responding leave space open for another buyer to step in and create a bidding war, or even more likely, for the seller to perceive that other serious buyers might be out there. A seller's mere perception of a hint of a whiff of the scent of a potential bidding war is a homebuyer's number one nemesis, ratcheting up the possible sales price in the seller's head on an exponential basis.

#2: CUT IN THE MIDDLE (WO)MAN
When you want to ask or tell the seller something, always always always go through your real estate agent, who will communicate your request or concern to the seller's agent. I know it seems inefficient, but it is truly a rookie move to contact the seller directly. It's just not done, mostly because the terminology is tough to master and legally sensitive. Also, some seemingly innocent and minor changes to your agreement with the seller might create problems with your lender; your real estate agent is better equipped than you to see these red flags. You hired your agent, so use him/her! It will prevent the catastrophic misunderstandings (read: drama) that can result when you or the seller says something even slightly different than what you each actually mean!

#3: GAUGE THE SITUATION WHEN DEALING WITH A DEVELOPER/BUILDER
A lot of this talk about negotiating and price and terms, etc. may be moot when you're buying a newly built home. By and large, the builder/developer dictates the terms on which they will sell you a home in their community, and you either take it or leave it. The list price is the price you pay, though in many markets, developers and builders are willing to negotiate if they have a large amount of inventory.

The builder will have a standard contract with a standard required deposit, standard contingency removal or objection periods, and a standard set of disclosures that they make to every buyer. The larger the builder, the more set they will be in their ways and to their price. That said, it doesn't hurt to ask for concessions or upgrades. Furthermore, builders hate getting sued, so they generally try to create a standard contract that affords you most or all of the same protections your real estate agent would build into a contract for you.

#4: GET THE DIRT ON PENDINGS
When the sold comps aren't that similar or sold a long time ago, or there is a very similar pending comp, you can go nuts wondering what price the buyer of that pending comp agreed to pay for the place. Sometimes the listing agents of pending comps can be sweet-talked into giving up the dirt. Your real estate agent can call them up, explain the situation, and ask obliquely for contract price hints, like "Did it sell for over (or under) asking? About how far over (or under)? What was the list price to sales price ratio? And how much competition was there? Did you have multiple offers?" And you can also make some educated guesses; the longer it was on the market, the less likely it sold for the asking price. The opposite is true, too. If it went off the market really quickly, it probably sold at or over the asking price.

#5: CHECK THE COMPS
The more money you offer, the more likely the seller will accept. Your real estate agent only gets paid if the seller accepts, so you can see why some agents tend to include or emphasize the highest priced comparables, even if they aren't the most similar comps for your property. Ask your agent for a copy of your Comparative Market Analysis (CMA) and ask for the full MLS listing details of the several most similar comparables. That way, you can decide for yourself how similar they really are!

#6: MAKE YOUR REAL ESTATE AGENT WORK FOR IT
If you are competing with other wanna-be buyers for a property, your real estate agent's prep work and presentation of your offer can be critical to your success. Hopefully you interviewed several real estate professionals and hired one you can trust and know will go the extra mile for you. Always communicate with your agent to ensure you both are on the same page in terms of expectations and deal breakers.

#7: CRUNCH THE NUMBERS
Before you finalize your decision about how much to offer, have your mortgage broker run a monthly payment on your offer price and estimate your property taxes and insurance. Often, buyers inch up in price during the house hunt and in the course of formulating their offer, so it's important to have a final check on the exact monthly and annual obligations you will incur if your offer is accepted.

Also, if you're seriously debating between offering two different prices and are having a hard time making the decision, ask your mortgage professional to run the payment, taxes and insurance on both of the prices you're considering. You might be surprised at how small (or large) an impact a $5,000, $10,000 or $50,000 difference in purchase price has on your ongoing payments, and it may help ease your decision making between the two amounts you are thinking about offering.

Protect Retirement Assets from Stock Market Volatility

How to Protect Retirement Assets from Stock Market Volatility

      

RISMEDIA, Friday, September 11, 2015— (TNS)—You’ve been through volatile markets before. You know not to sell in a panic.

But if the recent market gyrations have your attention, putting a few rainy-day strategies in your retirement game plan—particularly if you are in your 60s—can help you make the best of the situation.

Delayed retirement credits—the 8 percent per year pickup in income you get for delaying claiming past your full retirement age up to 70—are a great deal. Some advisers even recommend spending down an investment portfolio as a way to delay. But if that means pulling income out of a wounded portfolio—or if you could be ensnared by Medicare cost hikes next year—it might be time for a rethink.

If you already started Medicare and were planning to begin Social Security benefits sometime in 2016, think about accelerating those plans, says Michael Kitces, a financial planner, blogger and research director at Pinnacle Advisory Group. With Medicare Part B premiums set to increase next year, most Social Security recipients can take advantage of the program’s “hold harmless” provision, which caps premium raises at a beneficiary’s Social Security cost of living adjustment, which next year is zero, Kitces says. (Be aware this won’t work for high-income beneficiaries who will be subject to Medicare’s surtax.)

“Accelerating a bit more to take advantage of the Medicare hold harmless rules may be appealing, but the decision whether or not to delay Social Security is still dominated more than anything” by your ability to forgo benefits, which if you can do it will be more valuable, he says.

Tapping some home equity is another way to avoid taking retirement income from stock funds, but traditional home equity lines of credit can be frozen in certain market conditions.

If you’re 62 or older, it might make sense to establish a line of credit using a reverse mortgage (under the federal home equity conversion mortgage program), says Shelley Giordano, principal of Longevity View Associates, a reverse mortgage consulting firm.

Shop around for lenders because Giordano says some are offering low or no closing costs in exchange for a slightly higher starting interest rate. Some also will allow a homeowner to establish a credit line with just a nominal initial amount, such as $50.

Hopefully, you have investments outside the stock market from which you are drawing money for day-to-day expenses. Likewise, if you’re still a few years from retirement and gradually pulling money out of the market to create a retirement income stream, you can afford to take a pause in that strategy to let markets stabilize.

At some point, however, you’ll need to refill those buckets and make withdrawals, and who’s to say the market won’t be in even worse shape a few years from now?

The question becomes, are we there yet? Should investors refrain from withdrawing from stock funds, even if it’s part of a longer-term rebalancing strategy? Should retirees think about forgoing an inflation bump, or even taking a pay cut?

“On a year-to-date basis the market is down 6 percent or so, so we’re not in a correction mode yet,” says Judith Ward, senior financial planner with T. Rowe Price, as markets were rebounding somewhat.

If the correction deepens to more like 20 percent by year-end, she says, that’s when she might suggest forgoing the inflation raise.

Of course, it never hurts to start thinking about expenses you could cut out if that day comes.

A market decline can be a good time to convert money in a traditional IRA to a Roth IRA because you can convert more shares for the same taxable withdrawal, but you also have to assess whether converting makes sense at your age, experts says. Do it if you’re trying to diversify retirement income tax liabilities or leave money to heirs, but otherwise it makes less sense at this age, experts says.

It could also be wise to take withdrawals from variable annuities and certain life insurance products while asset prices are down, says Michael Goodman, an accountant and financial planner with Wealthstream Advisors Inc.

And if you’ve been looking for an excuse to end a bad relationship with an adviser, leaving now could be a good time because if it involves selling some positions, you could owe less in capital gains taxes.

“Determine if your investments were allocated properly and what the new adviser will do differently” before jumping ship, cautions Candace Bahr, managing partner at Bahr Investment Group.

Even if you don’t have an adviser, if you weren’t allocated well, do something about it rather than sitting on your hands, says Michael J. Garry, an adviser and estate planning attorney with Yardley Wealth Management.

“If you’ve kept too high an allocation towards stocks trying to ride the run-up, then I’d say this is the time to hop off and get to the right allocation,” he says.

Janet Kidd Stewart writes The Journey for the Chicago Tribune.

©2015 Chicago Tribune
Distributed by Tribune Content Agency, LLC

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